June 20, 2009

Economist's View - 3 new articles

The next time you hear someone cavalierly point to international comparisons in life expectancy as evidence against the U.S. healthcare system, you should be ready to explain how schlocky that argument really is.

National differences in life expectancies are a highly imperfect indicator of the effectiveness of health delivery systems. For example, life styles are important contributors to health, and the US fares poorly on many life style indicators, such as incidence of overweight and obese men, women, and teenagers. To get around such problems, some analysts compare not life expectancies but survival rates from different diseases. The US health system tends to look pretty good on these comparisons.

Becker cites a study that finds that the U.S. does better than Europe in cancer survival rates and in the availability of hip and knee replacements and cataract surgery.

It makes a lot of sense to think of health as multidimensional, so that some countries can do better in life expectancy while others do better in hip replacements and cancer survival.

But I disagree with Mankiw's claim that it's "schlocky" to compare life expectancy. If the U.S. really is spending lots more per person on health care and really getting less in life expectancy compared to other countries . . . that seems like relevant information.

To put it in statistical terms: much of our quantitative analyses are essentially comparisons. And, once you're comparing, it makes sense to consider other factors (for example, Americans are less likely than Europeans to smoke, and more likely to be obese). But the overall outcome is important in its own right. Becker mentions cancer survival rates, and, cancer survival is definitely important...,but a large change in cancer survival rate does not necessarily correspond to a big increase in life expectancy. And the same can be said for joint replacements and cataract surgery. What's missing in Mankiw's discussion is the connection between the huge cost differences between the U.S. and other countries, and the very specific cases where our system works better.

The funny thing is, I think my former co-blogger Robin Hanson would probably agree that government-funded healthcare is a bad thing--but for an opposite reason from Mankiw's! Hanson would oppose government health care, I think, because he would fear that it would lead to political pressure to spend even more on healthcare that, as he sees it, doesn't actually do much of anything to improve net health outcomes. In contrast, I think Mankiw is opposing a government system because he fears it would lead to cost-cutting and a move to a European-style system with lower cancer survival rates, fewer hip replacements, etc.

In summary, I am sympathetic to Mankiw's frustration with people who draw sweeping conclusions from raw comparisons. If policymakers are interested in moving the U.S. to a medical system more like France's, or Taiwan's, or whatever, they ultimately should be looking not at static comparisons but at how health and cost outcomes might change here under different proposed policies.

That said, life expectancy is important. If you're going to make a raw comparison, I'd rather compare countries on life expectancy than on cancer survival rates or the availability of hip replacements and cataract surgery.

Momentum for universal health care is slowing dramatically on Capitol Hill. ...[A]s you know, the worst news came days ago when the Congressional Budget Office weighed in with awful projections about how much the ... plans would cost... Yet these projections didn't include the savings that a public option would generate by negotiating lower drug prices, doctor fees, and hospital costs, and forcing private insurers to be more competitive. Projecting the future costs of universal health care without including the public option is like predicting the number of people who will get sunburns this summer if nobody is allowed to buy sun lotion. ...

If you want to save universal health care, you must do several things, and soon:

1. Go to the nation. You must build public support by forcefully making the case for universal health care... The latest Wall Street Journal/NBC poll shows that three out of four Americans want universal health care. But the vast majority don't know ... how much money the medical-industrial lobbies are spending to defeat it, and have no idea how much demagoguery they're about to be exposed to. You must tell them. ... Name names. They've decided to fight you. You must fight them.

2. Be LBJ. So far, Lyndon Johnson has been the only president to defeat American Medical Association and the rest of the medical-industrial complex. He got Medicare and Medicaid enacted despite their cries of "socialized medicine" because he knocked heads on the Hill. He told Congress exactly what he wanted, cajoled and threatened those who resisted, and counted noses every hour until he had the votes he needed. When you're not on the road, you need to be twisting congressional arms and drawing a line in the sand. Be tough.

3. Forget the Republicans. Forget bipartisanship. ... You can get 51 votes if you give up on trying to persuade a handful of Republicans to cross over. Eight year ago George W. Bush passed his huge tax cut, mostly for the wealthy, by wrapping it in an all-or-nothing reconciliation measure and daring Democrats to vote against it. You should do the same with health care.

5. Demand that taxes be raised on the wealthy to ensure that all Americans get affordable health care. At the rate healthcare costs are rising,... you'll need to tax the wealthy. Don't back down...

6. Put everything else on hold. As important as they are, your other agenda items -- financial reform, home mortgage mitigation, cap-and-trade legislation -- pale in significance relative to universal health care. By pushing everything at once, you take the public's mind off the biggest goal, diffuse your energies, blur your public message, and fuel the demagogues who say you're trying to take over the private sector.